What's In Your Wallet? Wait, You Don't Need One

A barista processes a customer's payment using Square, a device that turns a mobile device into a card swiper. More businesses are using the devices to simplify credit card payments. Others are embracing technology that allows consumers to pay with their cellphones.

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Most Americans pay with plastic or cash when they visit the grocery store, buy their daily coffee, or fill up the gas tank. But a growing number of large companies are trying to change that.

Google, Starbucks and Wal-Mart are among the many firms that are eager to replace consumers' wallets and stores' cash registers, with smartphones and other mobile devices.

Recently, Intuit — the company that owns the personal finance site Mint and makes TurboTax and Quicken — has been selling a small attachment for smartphones called "Go Payment." The device lets almost anyone, anywhere accept a credit card.

Girl Scouts On The Cutting Edge

Omar Green, Intuit's director of strategic mobile initiatives, says he saw the future when he stumbled on a savvy Girl Scouts troop.

"It became very obvious to me that there was a grand sea change in payments when the Girl Scouts started using Go Payment," Green says. "It was like, boom! It was crazy how much money these little girls were bringing in with Girl Scout cookies.

"So it hits me, we have got little 8-year-old girls who are not just consumers, but are merchants with Girl Scout cookies," he says. "So the next year, we went after the Girl Scouts in a major way."

For businesses, getting set up to accept credit cards was a big hassle five years ago. You needed to get a special machine to process electronic payments. Then you were charged a tangle of fees by banks and card processors.

"It's time to rethink these models," says Jack Dorsey, best known as the co-founder of Twitter. Dorsey's other company, Square, has blazed new ground in mobile payments. It developed one of the first little plug-in fobs that could transform smartphones into tiny little cash registers. It's also created an app that lets consumers pay for products just by walking up to the counter at a participating store and saying their name aloud.

An Increasingly Crowded Field

Even though only about 10 percent of the American public has ever used an app like this, the mobile payment space is getting crowded.

"Oh God, it's huge," Green says. "Everybody that thinks they can build you a mobile banking solution, is building you a mobile banking solution." Like Google, PayPal, Visa, MasterCard, AT&T, Verizon, T-Mobile and Sprint, just to name a few.

And Wednesday, more than a dozen of the nation's biggest retailers announced they are joining forces to build their own mobile payment network, under the name Merchant Customer Exchange (MCX).

Combined, the participating companies have more than $1 trillion in annual sales — and pay billions in payment fees.

"We think if you have a common set of standards in mobile payments, you can eliminate a lot of those costs," Mullman says. "And that's obviously very important."

And with so much competition right now to build a "digital wallet," there are some predictions that payment fees for merchants could actually fall.

On Thursday, Square's Jack Dorsey announced a new plan for small businesses that would fix the monthly fees Square charges for credit card and mobile purchases at $275 a month.

"We wanted to focus this on small business — we wanted to make it even simpler," Dorsey says.

Simpler and cheaper for merchants, perhaps. But some say digital wallets will never take off until there's something in it for consumers, too.

Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/.

Transcript

MELISSA BLOCK, HOST:

You're listening to ALL THINGS CONSIDERED from NPR News.

When you go to the store, chances are you pay with plastic or cash. But dozens of enormous companies, from Starbucks to Wal-Mart, would like you to try something else: your phone.

NPR's Steve Henn explains why so many firms are so eager to replace wallets and cash registers.

STEVE HENN, BYLINE: Omar Green is the director of strategic mobile initiatives at Intuit. Intuit owns the little personal finance website Mint. It makes TurboTax and Quicken. And recently, it's been selling a little attachment for a smartphone called GoPayment that lets almost anyone, anywhere accept a credit card.

OMAR GREEN: It became very obvious to me that there was a grand sea change in the payment space when the Girls Scouts started using Intuit's GoPayment.

HENN: So, like a couple of Girl Scouts?

GREEN: Oh, it was like one Girl Scout troop was using GoPayment and...

HENN: Did they just totally clean up?

GREEN: They just - boom. I mean, it was crazy how much money these little girls were bringing in with Girl Scout cookies. And so it hits me, oh, my God, we've got little 8-year-old girls who are now not just consumers but merchants. And so the next year, we went after the Girls Scouts, like, in a major way.

HENN: Five years ago, getting set up to accept credit cards was a big, giant hassle. You needed to get something called a merchant account, a special machine, and then there was a tangle of fees you were charged by banks and card processors.

JACK DORSEY: It's time to rethink these models.

HENN: Jack Dorsey is best known as one of the co-founders of Twitter, but his other company, Square, has blazed new ground in mobile payments. It developed one of the first little plug-in fobs that transformed a smartphone into a tiny little cash register. And it's created an app that lets consumers pay for products, like my favorite ice cream - could I get Bacio - at participating stores, simply by walking up to the counter and saying your name.

UNIDENTIFIED MAN: Your name came up. Stephen Henn?

HENN: Steve Henn. Even though only about 10 percent of the American public has ever used an app like this, the mobile payment space is getting crowded.

GREEN: God. It's huge.

HENN: Omar Green.

GREEN: Everybody who thinks they can build you a mobile banking solution is building you a mobile banking solution.

HENN: Google, PayPal, Visa, MasterCard, AT&T, Verizon, T-Mobile and Sprint just to name a few. And yesterday, more than a dozen of the nation's biggest retailers announced they're joining forces to build their own mobile payment network.

JEREMY MULLMAN: Wal-Mart and Target are among those.

HENN: Jeremy Mullman is a spokesperson for the group called MCX.

MULLMAN: Sears, CVS, Lowe's, Best Buy, Publix, 7-Eleven.

HENN: These companies have more than $1 trillion in sales and pay billions of dollars in payment fees.

MULLMAN: We think that if you have a common set of standards in mobile commerce, you can eliminate a lot of those costs, and that's obviously, you know, that's very important.

HENN: And with so much competition right now to build a digital wallet, there are some signs that payment fees for merchants could actually fall. Today, Jack Dorsey at Square announced a new plan for small businesses that would fix monthly fees they pay for credit card and mobile purchases at $275.

DORSEY: We want to focus with this on small businesses, so we wanted to make it even simpler.

HENN: And cheaper for merchants. But some think digital wallets will never really take off until there's something serious in it for consumers too. Steve Henn, NPR News, San Francisco. Transcript provided by NPR, Copyright National Public Radio.